European online display grows 10%

14 August 2014

LONDON: Online display advertising in Western Europe is set to grow at a compound annual growth rate of 10.3% over the next five years, according to a new report.

Forrester Research's Online Display Advertising Forecast predicts that spending on this format will grow three times faster than total advertising between now and 2019, by when it will account for 12% of all advertising expenditure in the region.

This development is being helped by underlying factors such as the growth in the online population and increasing amount of time spent online, as well as the adoption of new formats, including video and rich media. Forrester also noted the importance of mobile devices, saying that "the growth of the online display advertising market would be negligible if smartphones and tablets were excluded".

Analyst Michel O'Grady enlarged on these themes, pointing out that more than 100 hours of video is uploaded to YouTube every minute and that Google has had to create ways to curate this volume of content. He also cited studies showing UK click- through rates for rich media were more than double those for standard banner ads.

A recent survey by US adtech company Celtra found even higher click-through rates for rich media on mobile – nine times greater – while video play rates were 8.5 times higher for rich media.

And Forrester expects an increasing proportion of video and rich media ads to be viewed on mobile devices – 48% of all online display ads compared to 19% today.

This shift was highlighted by Victor Milligan, CMO of Nexage, a mobile advertising exchange, who in June told Warc: "There is a major creative mix shift underway in mobile advertising, as high-value rich media, video, and native ad formats take more and more share of the market." He expected these would be the majority ad formats sold by 2015.

O'Grady suggested that firms using online display ads would need to consider how to increase trust in online advertising, from the perspective of consumers, publishers and advertisers, in order to help it compete with TV advertising.